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New think tank hopes to shake up investment world

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A new not-for-profit think tank has been created with a lofty goal: to push for changes in the investment world to make things better for those who sock money away. 

The Thinking Ahead Institute, launched by Towers Watson, is “open to asset owners, investment managers and other groups motivated to influence the investment industry for the good of savers worldwide.” 

It already has 19 subscription members from Australia, France, South Africa, the U.K. and the U.S., interests with total assets of $5.6 trillion.

According to its website, the leading concern of the think tank is that, amid changes in economies, markets, business models and regulations, “it is possible for the focus on the end saver to slip.” 

The institute, therefore, is aimed at a higher purpose: “The mission and vision of Towers Watson’s investment business specifically calls on us to serve the wider needs of society and not just those of our clients and our people. We aim to ‘change investment for the better,’ which will benefit all participants.” 

One of the first items posted on its website is a paper from the group suggesting there are too many active managers. “Within financial services, public anger has so far been directed at the banks, but the asset management industry is arguably only just below the radar,” it says.

“It is clearly rational for an individual investor to hire an active manager to try and do better than all other investors. In the same way that it is rational for one person to graze an extra cow on common land. Unfortunately this just launches an escalating arms race, and the eventual, assured conclusion is a societally-sub-optimal outcome. … We should have less active management. Not none, but less,” the authors of the paper write. 

More research is promised, as are roundtable meetings and one-to-one meetings, the institute said, all aimed at helping the financial industry serve “the customer better than it currently does.”  

“We have long taken the view that we are not passive participants in the investment world, and we must use our influence to change investment for the better,” Chris Ford, global head of investment at Towers Watson, said in a statement. 

“Acting together,” he added, “the members of the Thinking Ahead Institute, with trillions of dollars of assets under management or advice, can become a prominent force for improving the value proposition for savers globally.” 

Tim Hodgson, head of the Thinking Ahead Group at Towers Watson, said that, so far, “change (in the industry) has been too slow.” 

“The institute is designed to accelerate this through collaboration, collective efforts and the exchange of ideas with like-minded organizations. To this end, we hope to find and connect with industry participants who believe in the value and power of thought leadership to create change.”

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